Kasba Iron Trader's , Katihar V. ITO, WARD, KATIHAR

ITA 183/PAT/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0023 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUPRIYA BISWAS
• Assessee Lawyers: K N PRASAD
• Keywords: Opportunity of cross examination; Question of law; Fair market value; Third party statement
• Section: 234B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC BENCH, PATNA BEFORE SHRI CHANDRA MOHAN GARG, J UDICIAL MEMBER ./ ITA NO. 183 / PAT /201 8 ( / ASSESSMENT YEAR : 20 10 - 20 1 1 ) M/S KASBA IRON TRADERS, GIRL S SCHOOL ROAD, KATIHAR - 854105 VS. ITO WARD - KATIHAR ./ PAN NO. : A ACFK 4928 P ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI K.N.PRASAD , A R /REVENUE BY : SHRI SUPRIYA BISWAS, JCI T - DR / DATE OF HEARING : 1 6 /0 9 /2019 / DATE OF PRONOUNCEMENT : 18 /0 9 /2019 / O R D E R THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY LEARNED CIT(A), MUZAFFARPUR , DATED 28.11.2018 FOR THE ASSE SSMENT YEAR 20 09 - 20 1 0 . 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED SIX GROUNDS OF APPEAL OUT OF WHICH GROUND NOS.1, 5 & 6 ARE GENERAL IN NATURE. NOW, THE GROUNDS REMAINED TO BE DECIDED AS GROUND NOS.2, 3 & 4, WHICH READS AS UNDER : - 2. FOR THAT IN THE FACT S AND CIRCUMSTANCES OF THE CASE, THE CITA IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 6,27,496/ - MADE BY THE ASSESSING OFFICER ON ESTIMATE ON ACCOUNT OF ALLEGED EXCESS STOCK. THERE WAS NO EXCESS STOCK. THE STOCK INVENTORIZED / TAKEN ARE NOT CORRECT INSPITE OF OBJECTION HAVING BEEN RAISED DURING THE COURSE OF SURVEY. IT WAS NOT POSSIBLE FOR TAKING SUCH HUGE STOCK WITH LIMITED MANPOWER. THE ENTIRE SALES AND PURCHASES ARE VERIFIABLE AND NOTHING CONTRARY HAS BEEN DETECTED. NO GOODS ARE SOLD ON THE PRICE QUOTED BY THE ASSESSEE IN AS MUCH AS THE ASSESSEE IS A RETAILER. NO REBATE OUT OF STOCK INVENTORISED HAVE BEEN CONSIDERED / ALLOWED ON ACCOUNT OF DAMAGED, DISCOLOR AND OUTDATED MATERIALS WHICH THE ASSESSEE IS ENTITLED AT LEAST 20 - 25 PERCENT OUT OF STOCK ITA NO . 183 / PAT /201 8 2 IN VENTORISED IN AS MUCH AS THE ASSESSEE HAS ANYHOW TO DISPOSE OF DAMAGED, DISCOLOR / OUTDATED GOODS. THE BOOKS OF ACCOUNT OF THE ASSESSEE HAS NOT BEEN REJECTED. THE ADDITION OF RS. 6,27,496/ - AS SUSTAINED IS ARBITRARY, UNJUSTIFIED, VOID AB - INITIO AND BAD IN LAW. IN ANY CASE, THE ADDITION AS SUSTAINED IS FIT TO BE DELETED. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CITA IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 10,000/ - AS MADE BY THE ASSESSING OFFICER ON THE BASIS OF THIRD P ARTY STATEMENT., THE ADDITION AS SUSTAINED IS ARBITRARY AND UNJUST AND FIT TO BE DELETED. 4. FOR THAT THE CHARGE OF INTEREST U/S 234A, 234B, 234C AND 234D IS ARBITRARY AND UNJUST. INTEREST CHARGED AND INCLUDED IN THE DEMAND NOTICE IS FIT TO BE DELETED. 3. WITH REGARD TO GROUND NO.2, LD. AR SUBMITTED THAT THE LD. FIRST APPELLATE AUTHORITY WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.6,27,496/ - MADE BY THE ASSESSING OFFICER ON ESTIMATION ON ACCOUNT OF ALLEGED EXCESS STOCK. LD. AR FURTHER SUBMITTED TH AT THE STOCK INVENTORISED/TAKEN ARE NOT CORRECT IN SPITE OF THE OBJECTION HAVING BEEN RAISED DURING THE COURSE OF SURVEY AS IT WAS NOT PRACTICALLY POSSIBLE FOR TAKING SUCH HUGE STOCK WITH LIMITED MANPOWER AT THAT POINT OF TIME. LD. AR SUBMITTED THAT AFTER VERIFICATION OF ENTIRE SALES AND PURCHASES NOTHING CONTRARY HAS BEEN FOUND OR DETECTED. LD. AR FURTHER SUBMITTED THAT BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE NOT BEEN REJECTED AND NO REBATE OUT OF STOCK INVENTORISED H AVE BEEN CONSIDERED/ALLOWED ON ACCOUNT O F DAMAGES, DISCOLOUR AND OUTDATED MATERIALS WHICH THE ASSESSEE IS ENTITLED AT LEAST 20 - 25% REBATE ON THE VALUATION OF STOCK DONE DURING THE SURVEY. LD. AR ALSO POINTED OUT THAT NO GOODS HAVE BEEN SOLD ON THE PRICE QUOTED BY THE ASSESSEE AND THE SURVEY TEAM HAS TAKEN MAXIMUM RETAIL PRICE(MRP) PRINTED ON THE ITEMS WITHOUT CONSIDERING A FACT THAT ON SUCH KIND OF ITEMS ITA NO . 183 / PAT /201 8 3 MRP IS PRINTED ON HIGHER SIDE AND COST PRICE/PURCHASE PRICE IS GENERALLY 20 - 30% LESS THAN THE MRP PRINTED THEREON. LD. AR SUBMITTED THAT SAME PR AYER HAS BEEN MADE BEFORE THE LOWER AUTHORITIES BUT WAS NOT ACCEPTED WITHOUT ANY JUSTIFIED REASONING, THEREFORE, IN THE INTEREST OF JUSTICE, REDUCTION OF 30% IN THE TOTAL VALUATION ADOPTED BY THE SURVEY TEAM ON THE BASIS OF MRP SHOULD BE GIVEN TO THE ASSES SEE. 4. REPLYING TO THE ABOVE, LD. DR SUPPORTED THE ACTION OF ASSESSING OFFICER AS WELL AS THE FIRST APPELLATE AUTHORITY AND SUBMITTED THAT THE REPLY OF THE ASSESSEE DATED 30.11.2012 WAS CONSIDERED BY THE ASSESSING OFFICER, THEREFORE, VALUATION ADOPTED BY THE ASSESSING OFFICER IS CORRECT AND HE WAS RIGHT IN MAKING ADDITION ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. 5. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSIONS AND FROM THE RELEVANT PART OF THE ASSESSMENT ORDER, I OBSERVE THAT THE ASSESSEE VIDE ITS REPLY DATED 30.11.2012 SUBMITTED THAT THE STOCK WAS TAKEN AT SALES PRICE WHICH INCLUDE GP APPROXIMATELY 10% AND STOCK WAS COUNTED AT TENTATIVE BASIS AND NOT IN ACTUAL BASIS DUE TO WHICH SOME DIFFERENCE IN VALUATION HAS BEEN OCCURRED. BEF ORE THE AUTHORITIES BELOW AS WELL AS BEFORE THIS BENCH IT IS ALSO ANOTHER CONTENTION OF THE ASSESSEE THAT FOR VALUATION OF STOCK, THE SURVEY TEAM HAS TAKEN MRP WHICH IS GENERALLY 20 - 30% HIGHER THAN THE ACTUAL PURCHASE PRICE. SECONDLY WHILE TAKING VALUATION OF INVENTORY/STOCK, NO REBATE HAS BEEN ALLOWED TO THE ASSESSEE ON ACCOUNT OF DAMAGE D , DISCOLOUR AND OUTDATED MATERIAL FOR WHICH THE ASSESSEE IS ENTITLED AT LEAST 20 - 25% REBATE. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES ITA NO . 183 / PAT /201 8 4 OF THE CASE, AS NOTED ABOVE, I AM O F THE VIEW THAT FOR VALUATION OF STOCK IN HAND THE GENERAL RULE ADOPTED IS COST PRICE OR FAIR MARKET VALUE WHICHEVER IS LESS WHEREAS IN THE PRESENT CASE THE SURVEY TEAM HAS VALUED THE STOCK OF ASSESSEE BY TAKING MRP WITHOUT CONSIDERING SOME RELEVANT FACTOR S VIZ., (I) SALES PRICE INCLUDES GP APPROXIMATELY 8 TO 10%; (II) THE STOCK INVENTORISED INCLUDES OLD AND ABSOLUTE STOCK ALSO AND REBATE ONACCOUNT OF DAMAGED, DISCOLOUR AND OUTDATED MATERIALS SHOULD BE ALLOWED AND (III) MRP PRINTED ON THE ITEMS CANNOT BE TA KEN AS BASIS FOR VALUATION OF STOCK BECAUSE MRP IS GENERALLY 20 TO 25% HIGHER THAN THE ACTUAL PURCHASE PRICE CHARGED BY THE MANUFACTURER/WHOLESALER. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS NOT DISPUTED QUANTUM OF MATERIAL/ST OCK INVENTORISED BY THE SURVEY TEAM. HOWEVER, I AM OF THE VIEW THAT THE VALUATION OF STOCK SHOULD HAVE BEEN DONE BY CONSIDERING THE SAID THREE FACTUMS AS NOTED ABOVE, THEREFORE, I DIRECT THE ASSESSING OFFICER TO ALLOW 20% REBATE ON THE VALUE ADOPTED BY THE SURVEY TEAM FOR INVENTORISED/TAKING VALUATION OF STOCK. ACCORDINGLY, GROUND NO.2 OF THE ASSESSEE IS PARTLY ALLOWED AND THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE VALUE OF STOCK ACCORDINGLY AND TO RECALCULATE/ESTIMATE THE EXCESS TOCK, IF ANY, FOUND DURING THE COURSE OF SURVEY. 6. WITH REGARD TO GROUND NO. 3, LD. AR SUBMITTED THAT THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.10,000/ - MADE BY THE ASSESSING OFFICER ON THE BASIS OF THIRD PARTY STATEMENT AND THE ADDIT ION SUSTAINED BY THE LD. CIT(A) IS ARBITRARY, UNJUST AND INCORRECT. LD. AR ALSO PLEADED THAT THE PAYMENT OF RS.10,000/ - WAS MADE ONLY ON ITA NO . 183 / PAT /201 8 5 20.01.2010 WHICH WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS, ACCORDINGLY THE ADDITION MADE BY THE ASSESSING OFFICER AN D CONFIRMED BY THE CIT(A) MAY KINDLY BE DELETED. 7. REPLYING TO THE ABOVE, LD. DR STRONGLY SUPPORTED THE ASSESSMENT AND FIRST APPELLATE ORDERS. 8. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, I AM OF THE VIEW THAT THE ASSESSING OFFICER HAS MADE ADDITION WITHOUT ANY BASIS AND LD. CIT(A) WHILE CONFIRMING THE SAME NOTED THAT THE ASSESSEE IS CONTINUOUSLY CHANGING ITS STAND ABOUT THE ACTUAL DATE OF PAYMENT, WHICH BRINGS HIS SUBMISSION UNDER SERIOUS SUSPICION. THE ASSESSING OFFICER HAS ALSO ASKED THE ASSESSEE F OR THE PAYMENTS MADE BY THE ASSESSEE, HOWEVER, THE ASSESSEE COULD NOT REPLY THE SAME, THEREFORE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE THE SAID EXPENDITURE OUT OF BOOKS AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. FROM THE AB OVE OBSERVATIONS OF THE BOTH THE AUTHORITIES BELOW, I DO NOT FIND ANY GOOD REASON TO INTERFERE IN THE FINDINGS RECORDED BY THE CIT(A) AND I UPHOLD THE SAME AND DISMISS THE GROUND NO.3 OF THE ASSESSEE. 9. WITH REGARD TO GROUND NO.4, LD. AR SUBMITTED THAT TH IS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ON THE DECISION OF HONBLE JHARKHAND HIGH COURT IN CASE OF AJAY PRAKASH VERMA IN ITA NO.38 OF 2010 REPORTED IN 2013(1) TMI 140, WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT INTEREST U/S.234B CAN BE LEVIED ONLY ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME. 10. CONTRA, LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. ITA NO . 183 / PAT /201 8 6 11. ON CAREFUL CONSIDERATION OF THE ABOVE SUBMISSIONS, I AM OF THE VIEW THAT THE ISSUE, BEING CHARGING OF INTEREST U/S.234A, 234B, 234C & 234D OF THE ACT, IS COVERED BY THE DECISION OF HOB'BLE JHARKAHND HIGH COURT IN THE CASE OF AJAY PRAKASH VERMA IN ITA NO.38 OF 2010 REPORTED IN 2013(1) TMI 140. THE HON'BLE COURT IN PARA23&24 HELD AS UNDER : - '23. LEARNED COUNSEL FOR THE APPELLANT SUBMITTE D THAT IT HAS BEEN ORDERED BY THE AO THAT INTEREST BE CHARGED AS PER RULE. INTEREST CAN BE LEVIED UNDER SECTION 234A AND 234B OF THE ACT. IT IS SUBM ITTED THAT IN VIEW OF THE JUDGMENT OF FULL BENCH OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ KUMARI VRS. COMMISSIONER OF INCOME - TAX REPORTED IN [2001] THE INTEREST CANNOT BE LEVIED OVER THE ASSESSED INCOME AND IT CAN BE LEVIED ONL Y ON THE INCOME DECLARED IN THE RETURN. THE REVENUE PREFERRED SLP BEFORE HON'BLE SUPREME COURT AGAINST THE SAID JUDGMENT OF THE FULL BENCH OF PATNA HIGH COURT, WHICH WAS DISMISSED BY THE HON'BLE SUPREME COURT ON MERITS VIDE ORDER DATED 01.08.2000 BY SAYING THAT THERE IS NO MERIT IN THE APPEAL. 24. LEARNED COUNSEL FOR THE REVENUE COULD NOT DISPUTE THIS LEGAL POSITION. THEREFORE, SO FAR AS QUESTION OF LAW INVOLVED IN THIS APPEAL THAT WHETHER THE INTEREST COULD HAVE BEEN LEVIED AGAINST THE ASSESSED INCOME OF THE ASSESSEE UNDER SECTIONS 234A AND 234B IS CONCERNED, IN VIEW OF THE FULL BENCH JUDGMENT OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ. KUMARI, THE REVENUE CAN LEVY THE INTEREST ONLY ON THE TOTAL INCOME DECLARED IN THE RETURNS AND NOT ON THE INCOME ASSESSED AND DETERMINED BY THE AO TO THAT EXTENT. THE ORDERS PASSED BY THE AUTHORITIES BELOW ARE ACCORDINGLY MODIFIED AND INTERES T SHALL BE CHARGEABLE IN THE LIGHT OF THE FULL BENCH JUDGMENT, REFERRED ABOVE.' 12 . R ESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HONBLE JHARKHAND HIGH COURT , I DIRECT THE AO TO RECOMPUTE THE INTEREST U/S.234A, 234B, ITA NO . 183 / PAT /201 8 7 234C & 234D OF THE ACT ON THE BAS IS OF TOTAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 13 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 18 /0 9 /201 9 . SD/ - ( C. M.GARG ) / JUDICIAL MEMBER /PATNA ; DATED 18 / 0 9 /201 9 PRAKASH KUMAR MISHRA , S R.P.S. (ON TOUR) / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE S ECRETARY ) , / ITAT, PATNA 1. / THE APPELLANT - 2. / THE RESPONDEN T - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, PATNA 6. / GUARD FILE. //TRUE COPY//